By Business Reporter- President Emmerson Mnangagwa said the United States dollar would cease to be legal tender in 2023 and would be replaced by ZiG.

This contrasts with Mnangagwa’s announcement in October 2023, when he extended the multicurrency regime by five years until 2030.

That move was seen as an effort to allay growing concerns about looming changes to Zimbabwe’s currency policy.

Speaking in Mutare during the commissioning of a new fruit juice and water processing plant, Mnangagwa indicated that the exclusive use of the ZiG may happen sooner than the 2030 timeline. He said:

In two years, in fact two years is too far off, but there will come a time when our ZiG currency has fully penetrated the market, then I will give a directive that the country will be using the ZiG only.

If you go to the shops to buy with the US dollar, they will refuse it. Even those who were performing and entertaining us today, who were being given US dollar tokens, in two months’ time you (they) will be given the ZiG and no US dollars because that is our currency and we should propel it.

In his remarks, Mnangagwa also stated that Zimbabwe could not continue relying on the US dollar given the perceived hostility of the United States government towards Zimbabwe. He said:

Biden (US President Joe) does not like us, but you like the money from his country, does that work? So as ZANU PF, we cannot keep using and relying on a currency that belongs to people who do not like us because one day they will try to hamper our efforts, and then we will not have a leg to stand on.

That is why we now have the Zimbabwe Gold currency (ZiG), which is our currency, a currency which we are propelling. We are propelling our currency.

Mnangagwa’s remarks highlight enduring tensions between Zimbabwe and the United States, notably concerning sanctions and other punitive actions imposed by Washington in response to human rights and related matters.

By portraying the US dollar’s use as problematic within this geopolitical context, the president is making a nationalistic argument for Zimbabwe to assert greater monetary sovereignty through the ZiG.

The ZiG is the country’s sixth attempt in the past 15 years to establish a functional local currency.

In response to Mnangagwa’s comments, economist Gift Mugano said there should be clarity on the state of the regulations that extended the multi-currency regime to 2030. He said:

So the statutory instrument which guarantees the use of USD up to 2030 will be a nullity? What will happen to banks which offered loans extending to 2030 on the back of this SI? In the same vein, what message is the GOZ sending to the banks with respect to lending? Slow down USD lending?

Launched in early April 2024, the ZiG is backed by 2.5 tons of gold reserves and $100 million in foreign currency reserves held by the Reserve Bank of Zimbabwe.